Apple Pay launches October 20, streamlines online and retail transactions with iPhone 6 handsets

In partnership with retailers, banks and credit card companies, Apple launches the iOS mobile payment service Apple Pay in the US on October 20.

Lynn La Senior Editor / Reviews - Phones
Lynn La covers mobile reviews and news. She previously wrote for The Sacramento Bee, Macworld and The Global Post.
Lynn La
3 min read

Editors' note: This piece was updated on October 16, 2014, to reflect additional news following Apple's October press event.

While Apple enthusiasts may often find their wallets emptying out with each new product announcement, wallets may literally start slimming down, thanks to Apple's recently announced iOS feature, Apple Pay.

Launching in the US on Monday, October 20, with other countries to follow, the mobile payment service works similarly to Google Wallet and enables users to streamline their retail and online purchasing experience with the iPhone 6 , the 6 Plus and the Apple Watch .

According to Apple CEO Tim Cook, getting involved in payments is a natural progression for the company and is a huge business.

"Every day between credit and debit, we spend over $12 billion," Cook said during a September press event when Apple Pay was first introduced. "That's over $4 trillion a year, and that's just in the US."

With the service, users can add credit cards that are already on file with their iTunes accounts and upload new cards to store on their iPhones. These cards will be integrated into PassBook, an existing iOS app that consolidates a user's coupons, membership cards, and ticket passes. Credit cards can be added via the camera, which will then be verified by their issuing banks to confirm that they indeed belong to the rightful owner.

The most recent pair of iPhones are equipped with two chips: near-field communication (NFC), which is common in Android handsets, and Secure Element. In conjunction with the handset's built-in TouchID fingerprint reader, users can carry out mobile payments at retail shops by tapping their device with an NFC reader and confirming the purchase with their fingerprint.

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Thanks to the iOS 8.1 update , other iOS devices can use Apple Pay, too. But without NFC, in-store purchases aren't supported; instead, users are limited to approving online in-app purchases with their TouchID fingerprints. Companies that are already on-board include Uber and Groupon, as well as OpenTable, which users can use to pay for restaurant meals.

Apple Pay also creates a "device-only" account number that works with Secure Element to generate one-time-use security codes with every transaction. This adds an extra layer of protection against data breaches that use the static code seen on the back of each credit card.

In the event that an iPhone is missing or stolen, users can employ the Find My iPhone feature to cancel all pending transactions. In addition, because sensitive credit card information isn't stored directly on the handset, users won't have to cancel the card if the phone is lost.

Emphasizing security, Apple Senior Vice President of Internet Software and Services Eddy Cue said that the company does not keep records of what users buy, where they buy it or how much they paid. Likewise, when using Apple Pay, cashiers will be unable to see your name, credit card number or security code.

With Apple Pay, iOS users can carry out third-party app transactions through TouchID. CNET Staff

The tech-giant has partnered with credit card companies like American Express, Master Card and Visa, as well as a number of popular banks, including Bank of America, Wells Fargo, Barclays, Chase, US Bank, Citi, Capital One, Navy Federal Credit Union, USAA and PNC.

After its initial September announcement, Cook reported that Apple has added 500 more banks to the service, and that they will roll out support later this year and early next year.

In the US, there are already 220,000 merchant locations that accept mobile payments, and Apple has been working with other retailers like McDonald's, Target, Subway and Whole Foods to integrate its service as well. Even Disney is expected to support Apple Pay in all its retail locations by Christmas. iOS 8 will also have an Apple Pay API available for developers, so expect more apps in the future to use this service, too.